COVID-19 has already had a monumental effect on supply chains around the world and it is expected that over the next six months many companies will be undertaking major reviews of their supplier relationships.
In the course of assessing supply chains and supplier relationships, Australian companies should make sure that they take account of modern slavery risks. This is even more important given the projected economic environment ahead and the modern slavery reporting framework that now applies at the Commonwealth level.
The Commonwealth Modern Slavery Act 2018 (Cth) commenced on 1 January 2019. An entity based, or operating in Australia with an annual consolidated revenue of over A$100 million is now required to report annually on:
Modern slavery refers to a range of forms of exploitation including forced labour, debt bondage, human trafficking and slavery.
Under the Modern Slavery Act a modern slavery statement must be submitted within six months after the end of the reporting entity's financial year.
In light of COVID-19, the Department of Home Affairs has announced an extension of the original deadlines. The new reporting deadlines are set out below:
Original deadline for submission of Modern Slavery Statement
New deadline for submission of Modern Slavery Statement
1 April 2019 – 31 March 2020 (Foreign Financial Year)
|30 September 2020||31 December 2020|
1 July 2019 – 30 July 2020 (Australian Financial Year)
|31 December 2020||31 March 2021|
|Reporting periods after 30 June 2020||
The six month deadline for reporting periods ending after 30 June 2020 remains unchanged.
The following mandatory criteria must be addressed in a modern slavery statement provided for the purpose of complying with the Commonwealth Modern Slavery Act:
The Department of Home Affairs issued Guidance for Reporting Entities in October 2019. This Guidance highlighted that although the modern slavery reporting regime is a continuous improvement regime, in order to prepare a meaningful modern slavery statement, a risk-based assessment will be necessary both in respect of an organisation's direct suppliers and potentially across its entire supply chain.
The Department of Home Affairs has issued additional guidance for organisations about how to reduce the risk of vulnerable workers in their operations and supply chains becoming exposed to modern slavery as a result of COVID-19.
The key steps that are highlighted include:
In 2018, New South Wales passed its own Modern Slavery Act. It was intended to commence on a day to be appointed by proclamation. However, following the passage of the Commonwealth legislation, concerns were raised about the constitutional validity of the NSW legislation and, as a result, no date was proclaimed for commencement. Instead, the legislation was referred to the NSW Parliament Legislative Council Standing Committee on Social Issues (the LC Committee) for inquiry.
On 25 March 2020, the Final Report from the LC Committee was published. While the LC Committee came to the view that it would be preferable to have a uniform and comprehensive modern slavery legislation framework, it ultimately supported the retention of the NSW Act. As part of its 17 recommendations, the LC Committee recommended that the NSW Parliament proceed to introduce amendments to the NSW Modern Slavery Act with a view to it commencing on or before 1 January 2021.
If it enters into force, the NSW legislation will apply to those organisations which:
As the financial threshold is lower for reporting in NSW it is anticipated that a further 1,650 entities will be picked up by this regime. The NSW modern slavery regime will also see the imposition of penalties (up to $1.1 million) against those commercial organisations that fail to meet their reporting requirements or that provide false or misleading information.
The NSW Government is yet to respond to the report but there is a high likelihood that the Modern Slavery Act 2018 (NSW) will be amended and subsequently adopted. We will continue to monitor developments.
We expect that many organisations that are required to report under the Commonwealth modern slavery regime will be well advanced in undertaking supply chain mapping, and risk- assessments of their operations and supply chains in preparation for the reporting deadlines. Many organisations will already be familiar with modern slavery risk reporting under the United Kingdom's Modern Slavery Act and therefore, will have a head start.
We are encouraging companies to factor in the potential aftershocks of COVID-19 into your modern slavery processes given that the unfolding economic environment may significantly increase modern slavery risks in your supply chain.
Additional issues your company may want to consider include:
If you have any questions as to the best-practice approach for assessing modern slavery risks in the COVID-19 environment or if you require assistance to prepare your modern slavery statement please contact:
M: +61 4 2364 9309
M: +61 4 3899 5013